State-owned utility Eskom has confirmed the successful resolution of a long-standing commercial dispute that began in 2022, with the Stefanutti Stocks Basil Read (SSBR) joint venture (JV) relating to the buildings contract at the Kusile power station, in Mpumalanga.

The resolution follows the completion of the formal Dispute Adjudication Board (DAB) process for Claim 5, which is a standard mechanism used on large infrastructure projects to resolve complex contractual claims.

Eskom said the settlement process enabled both parties to clarify their positions and identify the most appropriate contractual route to close all outstanding SSBR claims alongside Eskom’s counterclaims.

Through constructive engagement, Eskom said it had reached the full and final settlement of R580-million in regard to Claim 5, which is R105-million less than the DAB’s decision of R685-million. This settlement of R580-million includes Claim 5, Claim 6 and Eskom’s counter claim.

Prior to the DAB process beginning, SSBR’s original claim amount for Claim 5 was R1.6-billion.

“As Eskom drives multiple initiatives to increase efficiencies across the utility, the results demonstrate the . . . measures that have been put in place to defend Eskom and its balance sheet against contractor claims,” Eskom CEO Dan Marokane said on November 25.

He claimed that this outcome reflected Eskom’s approach to balancing cost, risk and time, avoiding prolonged legal proceedings while safeguarding public funds. He assured that Eskom’s payment to SSBR would not be recovered from the tariff.

Eskom claimed that settlements of this nature were common in large, multi-year infrastructure projects worldwide and that the agreement did not constitute any admission of fault, liability or mismanagement.

With Kusile power station now fully operational and Unit 6 having been the last unit to reach commercial operation on September 29, the settlement brings closure to one of the utility’s last remaining legacy contract matters.

It allows Eskom to now focus on contract close-out, operational optimisation and delivering reliable energy to South Africa.

Multidisciplinary construction group Stefanutti Stocks, meanwhile, has noted in an update to its shareholders this week that Eskom is expected to pay the settlement amount by December 12.

The group intends to use at least 80% of the proceeds from the settlement to repay a portion of an R850-million loan extended to it by financial services provider Standard Bank on October 31.